Telcos turn to data, mobile money as voice revenue suffers

Nigeria’s network operators are turning to other products and services to boost their revenue profile as increasing competition in voice and messaging services continue to affect their revenue.

The telcos are investing massively in data services, content and have started showing interest in mobile money in order to remain competitive and profitable.

The double-digit revenue growth some of them witnessed in other markets have also prompted them to launch mobile financial services in Nigeria.

The low voice earnings are compounded by the increasing popularity of apps that offer messaging, voice and video call services such as Skype, WeChat, WhatsApp, Messenger or Viber.

A market research firm, Ovum, had predicted that there would be a drop in spending on traditional communication services offered by the incumbent telcos by 36 per cent in the next ten years.

Ovum noted that services offerings of these apps were built on innovative business models and offered much lower price than traditional telcos were offering.

The wide use of these messaging apps whose services are driven by data and strong Internet connection have encouraged the network providers to invest massively in broadband infrastructure and upgrade their Internet network across the country.

Airtel Nigeria in its 2018 third quarter report stated that in the last one year, it has doubled its number of broadband base stations from 5,652 it had in December 2017 to 10,369 base stations as of December 2018.

The telco also reported $223m capital expenditure in Nigeria mainly for network upgrade and expansion.

Across Africa, the telco said, “Capital expenditure during the quarter was $170m for African operations, largely on account of investment in data capacities and network modernisation.”

For MTN, data revenue continues to exceed revenue from voice calls as the telecoms operator reported 52.5 per cent increase in data revenue as against 21.5 per cent growth in voice revenue in its third quarter report ended September 30, 2018.

The company attributed the improved revenue to an increase in active data subscribers as well as more smartphones on its network, the result of various Customer Value Management and Original Equipment Manufacturer-partnership initiatives.

To further improve their earnings, all the mobile network operators – MTN, Globacom, Airtel, ntel and 9mobile – advocated for an opportunity to participate in the mobile financial services industry to drive financial inclusion.

They promised to deepen financial inclusion in 30 months by collectively reaching 90 million Nigerians by deploying over one million airtime agents.

This advocacy paid off when the Central Bank of Nigeria issued guidelines for participation in the Payment Service Bank and subsequently, MTN announced its plans to apply for a mobile banking licence and launch the service in 2019.

The Chief Executive Officer of MTN Group, Rob Shuter, while addressing a conference in Cape Town said, “We will be applying for a payment service banking licence in Nigeria in the next month or so, and if all goes according to plan, we will also be launching Mobile Money in Nigeria probably around Q2 of 2019.”

Airtel also confirmed its readiness to establish a Payment Service Bank in order to promote financial inclusion in the country.

The telco, in a statement issued in Lagos, said that it would apply for the PSB licence through a subsidiary as directed in the Central Bank of Nigeria’s guidelines, adding that it had a vision of becoming the largest and most secured PSB in Nigeria.

Commenting on the CBN guidelines for mobile banking licence, the Chief Executive Officer and Managing Director of Airtel Nigeria, Mr Segun Ogunsanya, said, “In line with the guidelines shared by the CBN, we have commenced the process of applying for a licence as we believe that we are at a vantage position to empower and connect more Nigerians as well as deliver mobile banking services to the doorsteps of the financially excluded. Folks will no longer need to keep their money inside cooking pots or under their beds because we will securely connect them to the financial system.”

Telecom operators in Africa have recorded tremendous reach with mobile financial services on the continent due to their large customer base, existing distribution network and mobile phone penetration.

The most successful mobile money services managed by network operators are M-Pesa by Safaricom and MTN Mobile Money based on the number of registered customers on their platform.

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